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When do you think it will end?
Last Post 14 Aug 2011 09:30 AM by Gears. 7 Replies.
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coreyshawUser is Offline
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coreyshaw

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18 May 2011 05:56 PM
    So it seems that everything is effected by the economy. The economy is bad, so the job market is bad, and this directly effects the military. No one wants to get out of the military because the hope for a job in the civilian world is...bleak. So if Master Chiefs arent getting out, there's no room for Senior Chiefs to move up, which doesnt allow Chiefs to move up, and the cycle continues until there are no racks for recruits. Obviously we all know that the Coast Guard is very saturated. This means limited number of recruits, higher standards, and long waits to ship to boot camp. But this issue is being seen throughout ALL of the branches.
    When I was in High School, which was only 4 years ago, I remember seeing Army and Air Force recruiters set up outside of the cafeteria once a month, BEGGING kids to consider joining. I remember seeing Marine recruiters walking around the mall, sniffing out youth and handing out pamphlets. You dont see this anymore. The military used to be a sure fire way to begin a career. Walk right into a recruiting center for your branch of choice, let recruiters fill you with promises of riches and seeing the world and action and a life of adventure. Then, before you know it, you and 40 other guys are getting your heads shaved and thinking, "What have I done!?"
    I remember going to an army recruiting office with a friend about 5 years ago. There were a few guys there looking into joining. It was summer time, so they were all in shorts and sandals; their hair unkempt, and their attitude...less than thrilled. I went back to the same Army recruiting office with a different friend (I was his ride)and everyone in there interested in joining was wearing slacks, nice shoes, an ironed shirt and a tie. The recruiting process has gone from a "I guess I'll join the military" attitude, to a "GOSH I HOPE I CAN JOIN THE MILITARY!"
    The question I am posing is, do you see changes happening anytime soon? Lower standards, lower wait times, etc.
    What do you think it will take to make changes?
    What changes would you suggest to improve the state of our military recruiting process?
    And finally, the Coast Guard has never been a "Get out there and recruit!" sort of deal, they've never had to. But do you see things getting a little less crowded? Maybe giving out more medical waivers, shortening wait times to ship, allowing more people in, etc. If so, how soon?
    This topic is geared towards the military in general. Not just one branch. Except for the ^ last statement of course. =)
    Old Guard2User is Offline
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    18 May 2011 06:17 PM
    Lower standards? I hope never. I hope they get even harder. Military is a privilege not a right or a guarantee. Medical waivers, if there is a lack of healthy recruits I'm sure they will come back on some level, minimal I'm sure. But even that, someone can join and risk their life, their health and possibly their shipmates that have to take care of them?? I kinda hope that stays where it is too.

    Will military recruiting open again? Sure it will. Like anything, the economy is cyclical. It will bounce back, people will retire or only serve a tour or two and bunks will open. WHEN will that happen? Well if you know, let me know. My boyfriend has been out of work for quite sometime and no end in sight to him getting work... Luckily I am very well employed and can afford our lifestyle on just my paycheck. So it's just a time will tell thing.
    Sector NY, Staten Island
    coreyshawUser is Offline
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    18 May 2011 06:44 PM
    Sorry, I didnt mean lower standards as in, just let anyone in. I think some people see the military as a way out, or an easier route. So I think standards should still be high, but, for example. My buddy tried joining the Air Force. He got an 89 on his ASVAB, clean criminal record, great health, great shape, and a clean driving record. Everything was good to go. They wouldn't let him in because they said they wanted to see a 90 or above on the ASVAB. Now he is a very successful Army Ranger. But when EVERYONE wants to join the military, the military can afford to be more selective.
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    18 May 2011 06:58 PM
    Oh, ok... again, I don't think standards should be lowered. But an 89 is a very respectable ASVAB score. I know there is the minimum but I hope we never go that low. I would love to see it stay around an 80 to be considered. A 90 is tough by even the smartest but the AF must be able to afford being that picky at this moment. I'm glad he has a good career (?) as a Ranger. Good question.
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    coreyshawUser is Offline
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    18 May 2011 07:21 PM
    He enjoys it. He cant tell me much but he seems happy. And he must be good at it because he has a rack of ribbons and medals like Ive never seen ha
    Iceman1978User is Offline
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    13 Aug 2011 02:35 PM
    There were ominous signals long before the credit crisis of 2007. The speculation in the real estate market, the availability of interest-only loans, the lack of oversight into the extension of credit, falling levels of savings as a percentage of income, higher consumer debt-to-income ratio and the growth in what's known as "survival debt" which is basically when you rely on credit to pay bills you used to pay for with cash. I knew we were in trouble when I started to see title loan and check-cashing places in every shopping center. Just 10-15 years ago you didn't see nearly as many.

    There are similarities between the events which caused the great depression and the "great recession". I don't know what's so great about it, but...

    When an investor could not afford to purchase the stock at full price, they purchase what were known as margin buys where they put down some of the money to purchase stock and borrow the remainder from banks or from stock brokers. At the time the margin requirement was between ten to twenty percent, which meant they could borrow upwards of seventy percent to purchase stocks. Believing that prices would continue their upward spiral, investors failed to see the inherent risk involved in this practice. If the stock price were to fall below the loan amount, the broker would issue a margin call, which meant the investor would have to pay back their loan immediately. This would prove to be one of the major factors in why the stock market crashed as it did in October of 1929. The stock market crash was not completely unexpected however. There were warning signs earlier in the year, though they went largely unheeded.

    As early as the spring of 1929 the stock market declined in what could be called a mini-crash. As prices fell, margin calls were issued, and investors began to panic. This was quickly resolved however, when banker Charles Mitchell announced that the bank would continue to write loans. His company (National City Bank) would soon loan nearly $650 million which would be lost in the crash. While an expedient option at the time, this did not address the issue of unsustainable prices. Unsustainable prices cannot be maintained indefinitely. When banks began lending money so people could buy stocks on margin, and then began investing people’s savings into the stock market; they placed the accounts of millions in jeopardy. As stock prices fell, investors were forced to empty their bank accounts to pay margin calls, and those with money still in savings were in shock to find that their money had been invested without their knowledge. This lead to massive bank runs and caused a general mistrust of banks across the nation. In similar fashion, businesses that invested into the stock market were forced to have massive layoffs, assuming that they even survived, in order to stay in business. As a result, unemployment skyrocketed. In the twenties it was the use of margin buys that were the contributor to the stock market crash. In the early 2000's it was the use of credit default swaps.

    A credit default swap is credit derivative contract between two counterparties, where the buyer makes payments to the seller in the event that there is a default. A credit default swap, or CDS, works similar to the use of put options on the stock exchange in that they are not a regulated form of insurance. Oftentimes in a CDS deal, hedge funds will sell protection to banks, who will then sell protection to other banks, and so on. This can create a circle which can place investors in a precarious situation. The widespread use of credit default swaps, while useful and functional to a certain extent, has expedited the spread of bad debt in today’s volatile market. Credit default swaps are a relatively new financial tool and have come under scrutiny recently as being a contributing factor behind the ongoing credit crunch.

    Suppose that you have a pension fund which owns a $10 million five-year bond issued by Alpha Corporation. In order to protect your investment and the solvency of the pension fund in the event of Alpha’s default on its loan, you would purchase a CDS from the bank in the notional amount of $10 million. In return for this protection, the bank would collect 2% from the pension fund, or $200,000 per year, for a five-year time frame. Assuming that Alpha Corporation makes good on its debt, the bond will be repaid to the pension fund. Although this reduces the return rate to the pension fund, the risk of a default drastically reduced, but not entirely eliminated. The pension fund would still face a counterparty risk should the bank become insolvent and be incapable of honoring the CDS contract. If Alpha Corporation were to default on the bond, the pension fund would stop payment to the bank and then be reimbursed for the remainder of the bond. If Alpha Corporation were bought by another company, the pension would then have the option to sell the remainder of the credit protection on the open market.

    In theory this sounds like a good idea. It reduces risk and helps to cushion the blow when a hedge fund or pension is left in a bad position. It could also create an incentive for investors to profit on the reduction in credit worthiness of businesses. If a business has one-million in outstanding debts, it is possible that their creditors would be willing to unload the debt in the form of bonds for $900,000 if they are afraid the debt will not be repaid. An investor who purchases the bonds would stand to make a $100,000 profit if the business were to pay the debt in full. The reality of credit default swaps is much more complicated than it seems.

    Credit default swaps were described as “financial weapons of mass destruction” by multi-billionaire investor Warren Buffett. The market for credit derivatives has become so large that in many cases it largely outweighs the actual amount of outstanding bonds. If Alpha Corporation were to have $1 billion in bonds, it is possible that they could have $10 billion in CDS contracts. If the company were to default on its debt and have a recovery rate of 40-cents on the Dollar, the loss to investors on bonds would be $600 million. The loss to credit default swap sellers would be substantially higher at $4 billion. Credit default swaps are a double-edged sword in this way. They will spread risk and loss, but will also simultaneously amplify it.

    Sound convoluted and confusing? It is. Trust me, a lot of bankers still don't fully understand credit derivatives.

    The credit default swap market has been one of the major contributors in what caused the current financial crisis. A consumer will take out a loan to buy a house in an overpriced market, they will then borrow against the equity to pay consumer debt, and the bank will take this debt and sell a CDS contract to reduce its own financial risk. The CDS will be purchased by hedge funds, investors and pensions. When the real estate market began to falter (due to higher interest and increasing energy prices) the average selling price fell. This caused a chain reaction which placed many homeowners in a negative equity position. Even owners who had not turned their home into an ATM through the use of home equity loans had, in many cases, made use of interest-only financing, negative amortization or variable-rate mortgages. They found themselves in a similar predicament and began defaulting on their loans. Compounding this were the high energy prices and the ensuing collapse of the market for trucks and sport-utility vehicles. High energy prices caused inflation, which continued to drain both budgets and savings. Bankruptcies begin to rise and CDS contracts were called in. Those who issued them were forced to sell stock shares to make good on payments, or were forced to tap into reserves. Stock prices began to fall, banks began to fail and companies lost money by the multi-billions. In the twenties it was the stock market that was overpriced and saddled with unrealistic expectations. In recent times, it has been the real estate market.

    Things will get better though. The US has been through two depressions, at least ten recessions, two world wars, and countless natural disasters over the course of her history. It will get better.
    Iceman1978User is Offline
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    13 Aug 2011 02:44 PM
    But to make a long story short, there was a perfect storm of events that got us to this point.
    GearsUser is Offline
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    Gears

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    14 Aug 2011 09:30 AM
    As far as retention in the CG goes, the high command is addressing the issue via the CRSP (Career Retention Screening Panel) essentially, it's a program designed to retain the best and brightest, while affording the opportunity for others to retire. The intent is to create upward mobility for junior personnel. The other branches have similar programs going with some variations.

    The CG won't be lowering standards. If it ever happens, then I'll know it's time for me to find a new employer. I take great pride in being a member of the only military service people don't get to join. Each person in the CG is individually selected by their recruiter. No one is entitled to a job in the CG, so if you are applying have a back up plan.

    If you want things to change, more billets, more equipment, more training, etc. I urge you to write your elected officials, and vote accordingly.
    “I’m not in this world to live up to your expectations and you’re not in this world to live up to mine.” ― Bruce Lee
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